Budget talks begin; conferees await word on softening revenues

By Colin A. Young, State House News Service

Monday

Jun 5, 2017 at 7:14 PMJun 5, 2017 at 7:14 PM

BOSTON - Negotiations on the fiscal 2018 state budget kicked off Monday as six lawmakers huddled behind closed doors to begin resolving differences between the House and Senate's roughly $40.3 billion spending plans, deliberations that could be more pivotal than usual this year.

After meeting for three minutes in open session, the conference committee voted to continue discussions in closed executive session until producing a compromise budget, which is due by the end of the month.

The negotiations commence as lawmakers and the Baker administration deal with fiscal 2017 tax collections that have fallen significantly short of projections, and amid acknowledgments that revenue projections used to build the House and Senate fiscal 2018 budgets are unlikely to hold up. The most recent estimates suggest collections this fiscal year could miss the current benchmark by between $375 million and $575 million.

"We know that there are uncertain fiscal times and we will be learning more about what the situation is as this week progresses," Senate Ways and Means Chairwoman Karen Spilka said. "We will work to remain responsible fiscal stewards of the commonwealth's taxpayer dollars while upholding the commitments that we all made to the residents, to our communities and to those across the commonwealth."

The Department of Revenue is expected to announce tax revenue collections for the month of May later Monday, an announcement that Gov. Charlie Baker pointed to as a clarifying moment when State House leaders will have a better idea of how fiscal 2017 will end up, and what it could foretell for fiscal 2018.

Led by Spilka, an Ashland Democrat, and House Ways and Means Chairman Brian Dempsey, a Haverhill Democrat, the committee also includes Democrats Sen. Sal DiDomenico of Everett and Rep. Stephen Kulik of Worthington and Republicans Rep. Todd Smola of Warren and Sen. Vinny deMacedo of Plymouth.

"I think all of us together will work very hard over the coming weeks to not only really drill down on our revenue picture and projections going into FY18 but also to, I think, put together a document that is fiscally responsible, one that recognizes that it is important to focus on both the long-term and the short-term," Dempsey said.

Though none of the members gave voice to it Monday, the conference committee will likely have to construct a consensus fiscal 2018 budget with a lower bottom line than originally projected.

"We anticipate the tax revenue projections for fiscal 2018 will be reduced by an amount yet to be determined," Assistant Secretary for Capital Finance Jennifer Sullivan said on a May 31 conference call with state investors.

Dempsey, Spilka and Administration and Finance Secretary Kristen Lepore agreed in January to build the fiscal 2018 budgets on an assumption that state tax receipts would grow 3.9 percent in fiscal 2018.

In announcing the agreed-upon revenue figure, budget officials used words like "conservative," "cautious," "stable" and "modest" to describe the forecast of the state revenue picture that, if met, would easily outpace the rate of growth 10 months through fiscal 2017 - tax collections through April were up just 1.1 percent.

The Massachusetts Taxpayers Foundation says a "substantial downgrade to (FY18) revenue is likely, and if it occurs, will require major spending reductions" in the final budget.

"The similarities between the two budgets in terms of approach to spending and revenue usually make it easier to resolve fiscal issues quickly, but once again Conferees will be faced with the task of reevaluating basic tax revenue assumptions," MTF wrote in its analysis.

Senate President Stanley Rosenberg, immediately after the Senate passed its budget last month, said, "It's going to be a rough budget conference."

The legislators are working off of budgets (H 3601 and S 2076) with similar bottom lines but different line-item allocations and local earmarks. The Senate also tacked on a host of policy proposals to its spending bill.

The final Senate budget clocked in at $40.843 billion, while the House's is $40.829 billion, according to the taxpayers foundation.

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